U.S. stocks sink again in face of heightened worries

KateGibson

NEW YORK (MarketWatch) -- U.S. stocks crumpled Wednesday, with the S&P 500 closing in bear market territory, as financial and technology stocks took it on the chin in the face of escalating fears about the impact of the slowing economy and credit crunch on coming earnings reports.

Shares of technology bellwether Cisco Systems Inc. slid to a new 52-week low as analysts raised questions about the high-tech giant's upcoming quarter on concerns that businesses would cut spending on technology. Read full story.

"Concerns about Cisco's future management hierarchy also weighed, as did unkind words from Fitch on a potential Merrill downgrade," said analysts at Action Economics.

The slide halted a failed attempt by blue chips to extend the Dow industrials' biggest one-day jump in nearly a month, with a mild rise in oil prices and worry about the impact of the credit crunch on the financial sector also curbing enthusiasm for equities.

"Most of the attention is going to be on earnings, and the earnings of financials," said Hugh Johnson, chairman of Johnson Illington Advisors. "We'll get those as well as earnings from technology next week."

The major indexes finished at or near session lows.

Off 21.3% from its Oct high, the Dow Jones Industrial Average
DJIA, -0.05%
fell 236.77 points, or 2.1%, to 11,147.44, with all but three of its 30 components ending in the red, with Intel Corp.
INTC, +0.83%
off 5.3% and American Express Co.
AXP, +0.54%
off 5.7%.

Alcoa Inc.
AXP, +0.54%
among the stocks to offer limited support much of the day, lost steam along with the broader market. The aluminum producer's stock off 2.4% by the finish, on the heels of Alcoa's earnings report late Tuesday. Read full story.

After Tuesday's close, the S&P 500 index was down 20.3% from its Oct. 10, 2007 high of 1,562.

Mortgage-finance giants Fannie Mae
FNM, +2.52%
and Freddie Mac
FRE, +0.00%
were among the financials stocks on the decline, continuing a bumpy ride that began Monday on fears the two would need to raise billions in new capital. Comments by regulators soothed those fears Tuesday, but the stocks were again under pressure Wednesday, with Fannie down 13.1% and Freddie slumping 23.8%.

Utilities proved the S&P's sole advancing sector at the end of the day, up 0.85.

On the New York Mercantile Exchange, crude gained 1 cent to end at $136.05 a barrel, with the market only partially supported by a decline in U.S. inventories. Energy stocks such as Exxon Mobil Corp.
XOM, -0.11%
and Valero Energy Corp.
VLO, -0.21%
fell.

Unplugged

Elsewhere on the Nymex, gold futures ended higher, with the contract for August delivery settling at $928.6 an ounce, with materials stocks including Newmont Mining Corp.
NEM, -1.71%
and U.S. Steel Corp.
X, +1.29%
on the rebound.

The technology-heavy Nasdaq Composite
COMP, +0.15%
dropped 59.55 points, or 2.6%, to 2,234.89, The Nasdaq ended off 21.8% from its October high.

Shares of Cisco lost 5.7%.

Trading volume was relatively light, with nearly 1.5 billion shares traded on the New York Stock Exchange and 969 million exchanged on the Nasdaq. Decliners outran advancing issues on both exchanges by more than 2 to 1.

Treasurys were mostly higher, with the 2-year note yields falling to 2.4%. See Bond Report.

Early data reports saw the Mortgage Bankers Association indicating mortgage applications had climbed a seasonally adjusted 7.5% last week compared with a week before, with total applications down an unadjusted 18.1% for the week ended July 4 from the year-ago period. Read full story.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information.
All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only.
Intraday data delayed at least 15 minutes or per exchange requirements.